Why Health Net Shares Surged

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of commercial managed health-care services company Health Net (UNKNOWN: HNT.DL  ) vaulted higher by as much as 15% after announcing its third-quarter earnings results and resolving a dispute with the state of California.

So what: For the quarter, Health Net reported a 3% rise in revenue to $2.78 billion as its net income fell to just $0.22. Wall Street had been looking for the health-care solutions provider to report $0.36 in profit on revenue of $2.8 billion. Luckily, shareholders were willing to overlook the earnings miss because Health Net resolved its long-standing dispute with the state of California's Health Care Services department regarding cuts to Medicare and Medicaid reimbursement rates. The company pledged to find new ways to work around the cuts and received contract extensions that extend through 2018 to 2022.

Now what: It's great news that Health Net isn't locking horns with the state of California anymore, but that doesn't exactly give it a clean bill of health. Plenty of challenges still remain, given reduced reimbursement rates and higher medical costs within the state. I'd give Health Net a few quarters to prove its own health to investors before you even remotely consider buying into this company.

Craving more input? Start by adding Health Net to your free and personalized Watchlist so you can keep up on the latest news with the company.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3478377, ~/Articles/ArticleHandler.aspx, 10/23/2016 12:55:45 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
HNT.DL $0.00 Down +0.00 +0.00%
Health Net CAPS Rating: *****